If you're a business owner in Michigan, understanding your
Experience Modification Factor—often called the
Experience Mod,
E-Mod, or just
Mod—can make a big difference in how much you pay for
workers’ compensation insurance.
In this article, we’ll break down what the Experience Mod is, how it’s calculated in Michigan, and why managing it is critical to controlling your insurance costs and maintaining a safe workplace.
What Is the Experience Mod?
The
Experience Modification Factor (Mod) is a number used by insurance companies to adjust your workers' comp premium based on your company’s
claims history compared to other businesses in your industry.
- A
Mod of 1.0 means your claims history is exactly average.
- A
Mod below 1.0 means you’ve had fewer or less severe claims than average—this can reduce your premiums.
- A
Mod above 1.0 means you’ve had more frequent or severe claims—resulting in higher premiums.
In short: your Mod is a
risk score tied directly to
real dollars.
How the Experience Mod Affects Your Workers' Comp Premium
The Mod acts as a
multiplier to your workers’ compensation base premium. For example:
- A Mod of 0.85 reduces your premium by 15%
- A Mod of 1.15 increases your premium by 15%
That difference can add up to
thousands of dollars each year.
But the Mod does more than just impact price. It also signals to others—like potential clients or partners—how well your company manages workplace safety. In some industries, especially construction, a low Mod can be a
competitive advantage when bidding on projects.
How Is the Experience Mod Calculated in Michigan?
For the most part, Michigan follows the standard National Council on Compensation Insurance (NCCI) formula with some state-specific adjustments.
The Mod takes into account:
- Actual losses: The cost of claims your business has filed
- Expected losses: What a company your size and in your industry is expected to have
- Payroll: Total payroll by classification
- Claim frequency and severity
Importantly, the formula
penalizes frequent small claims more than a single large one. Why? Because frequent claims are seen as more controllable and reflective of a workplace safety issue.
🧠
Learn more about how the Experience Mod is calculated in Michigan:
Experience Mod Summary PDF
How to Improve Your Experience Mod
Improving your Mod isn’t just about avoiding catastrophic accidents. It’s about
reducing frequency, managing claims well, and creating a strong safety culture.
Here are a few strategies:
1.
Enhance Workplace Safety
Invest in employee training, hazard prevention, and regular safety audits. The fewer accidents, the better your Mod.
2.
Injury Management and Reporting
Prompt reporting and proper documentation can keep claims from escalating. Work with your insurance agent and carrier for guidance.
3.
Return-to-Work Programs
Get injured employees back to light duty as soon as medically appropriate. This reduces claim costs and supports employee morale.
4.
Analyze Your Claims History
Work with your insurance advisor to review past claims. Spot patterns, fix underlying problems, and track progress.
Why the Experience Mod Matters for Michigan Businesses
Whether you're in construction, manufacturing, logistics, or any other industry where workplace injuries are a risk, understanding your Experience Mod is
essential.
Not only does it affect your
insurance premiums, but it also reflects on your company’s
commitment to safety and may be used by others to assess your operational risk.
Final Thoughts
The
Experience Modification Factor isn’t just an insurance number—it’s a scorecard that can impact your
bottom line,
reputation, and
future business opportunities.
If you’d like help understanding your Mod, reviewing your current workers’ comp coverage, or identifying ways to improve your score, we’re here to help.
📞
Contact us today to get started on lowering your workers' compensation costs and building a safer workplace.
